Lunar Energy enters solar+battery field with $300M investment
Dan Finn-Foley, energy storage expert at PA Consulting, comments on residential solar startup Lunar Energy.
The article notes that the residential market for solar systems paired with batteries is complicated, with lots of companies competing with one another and sharing customers at the same time. All have different offerings, each with its pros and cons and available in various configurations.
As the former head of Tesla’s residential energy business, Kunal Girotra understands just how complicated that market is. As CEO and founder of newly unstealthed startup Lunar Energy, he sees room for an “end-to-end home battery system” to break through the clutter — and for a broader set of technologies down the road to “transform homes to 100 percent clean energy.”
Wednesday’s unveiling reveals significant backing for this concept. Since its quiet founding in 2020, the Mountain View, California–based startup has raised two investment rounds adding up to $300 million, led by U.S. residential solar leader Sunrun and South Korean battery giant SK Group.
Other investors include Japanese trading conglomerate Itochu and automaker Honda, which have both taken a minority stake in the company. That stake comes as part of Lunar Energy’s acquisition of Moixa, a U.K.-based software provider that’s managing a fleet of 35,000 residential battery systems in Japan and more in the U.K.
Lunar Energy has hired about 250 employees and built a 35,000-square-foot manufacturing facility in Mountain View, Girotra said in a Wednesday interview. Its first product, expected to be available in the next few months, will be “a combination of battery modules, power electronics and software, all designed from the ground up,” rather than the cobbled-together systems common today that combine “this component from this company, that component from that company.”
This mix-and-match ecosystem can confuse homeowners and installers, he said. It’s not always clear which combination of systems is best suited to provide backup power during grid outages, or how much juice batteries need to store up to keep different combinations of home loads running over extended periods of time, for example.
Nor is it always clear which of the vendors involved is in charge of managing the interplay of solar-generated power, battery storage capacity and household loads. Handling those tasks effectively is important to save the most money possible for customers signed up for time-varying utility rates — or for customers to earn money by signing up to bid their battery capacity into utility or energy market grid-services programs.
Getting the software right
Lunar Energy is far from the first company with the idea of “owning the home” through new and elegant energy-management technology, Dan said in a Thursday interview. So far, those attempts haven’t succeeded — but the market is still in its early stages, he noted.
“You could make a compelling argument that the majority of residential storage on the grid today has no economic reason for existence,” he said. “A large proportion of these storage systems bought by early adopters have been more emotional decisions. They’ve been driven by the ‘cool factor,’ or spending money on nonmonetary factors, like using your own solar power or having clean backup power.”
But according to Dan, this situation is now “changing pretty dramatically.” First, the costs of solar and batteries have continued to fall precipitously, although supply-chain constraints have disrupted this downward trajectory. Second, a set of virtual power plants — collections of homes with a combination of rooftop solar, batteries, smart thermostats and remote-controllable electric vehicle chargers and appliances — have begun to prove that they can deliver value to utilities and to customers.
He added: “To truly be a smart-home provider, not just smart whole-home controls but at the grid level, the key barrier is software."
A key challenge for Lunar Energy and other home battery contenders is cost, according to Dan. “A lot of that comes down to scale, but a big part of that will be customer acquisition,” he said. “How are they going to be building a pipeline of customers to make this work? And what are customers going to be expecting in the form of returns?”